The U.S. housing market, entering its busiest season, is tipped so far in favour of sellers that almost a third of listings in areas from Washington, D.C., to Denver and Seattle are under contract in two weeks or less.
One home in Washington attracted 168 offers in December and sold for almost twice the asking price. About 70 people lined up last month for a lottery to select buyers for four available houses in a San Ramon, California, subdivision where, in August, bidders camped for weeks to secure purchases.
A plunge in U.S. home listings to a 12-year low is driving up prices and preventing transactions from returning to historically normal levels. Many potential sellers are holding off until values rise more, while investors are snatching up distressed properties before they reach the market. Builders, reporting their best orders in years, can’t increase production fast enough. As buyers seek to take advantage of record-low mortgage rates, the supply and demand imbalance threatens to further limit deals as the key spring selling season approaches.
U.S. home prices rose 5.5% in November from a year earlier, the biggest annual gain since August 2006, the S&P/Case-Shiller index of values in 20 cities showed last week. Existing home sales fell 1% to a 4.94 million annual rate in December as tight supply put a lid on deals, according to the National Association of Realtors. A normal level is 5 million to 5.5 million transactions, according to industry watchers.
About a third of homeowners say their biggest concern about selling now is that they will miss out on future price gains, according to a January survey by Redfin, a Seattle-based brokerage. That surpassed the economy as the top worry.
New listings in 21 of the largest U.S. cities plunged 21% last month from a year earlier, led by declines of more than 35% in the San Francisco Bay area, Las Vegas and Atlanta, Redfin said. At the end of 2012, about 28% of home listings nationally went under contract within 14 days, with cities in California’s Silicon Valley and Los Angeles areas exceeding 40%. In Washington, Seattle and Denver it was more than 30%.
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